Delhi Turns The Screws: Banks And Insurers Told To Cut Costs, Travel And Tailpipes

Kalpana Kanungo - Mumbai Bureau May 19, 2026 3,350 Views

New Delhi has ordered state-run banks, insurers and financial institutions to sharply tighten discretionary spending, signalling a fresh austerity push across India’s public financial sector. The directive covers everything from travel and meetings to vehicle fleets, and is framed as both a cost-control and green-transition move.

The Department of Financial Services (DFS) circular, issued under the finance ministry, instructs public sector banks (PSBs), regional rural banks (RRBs), PSU insurers and other state-backed institutions to reduce non-essential expenditure and rely more on virtual engagement. The order follows recent calls from the Centre for restraint in official spending as global uncertainty clouds the economic outlook.

What The New Spending Curbs Say

The DFS order asks banks and insurers to conduct reviews, meetings and consultations via video conferencing unless physical presence is “absolutely essential.” Foreign travel by chairpersons, MDs, CEOs and senior executives is to be kept below prescribed limits, with overseas events attended virtually wherever possible. Domestic travel and large in-person conferences are also to be trimmed.

Shift To Electric Vehicles And Efficiency

In a notable green push, the circular urges all covered institutions to phase out petrol and diesel vehicles hired at head and branch offices and replace them with electric cars “as far as possible.” The aim is to combine savings on fuel and maintenance with support for India’s EV adoption targets, while signalling a more sustainable public-sector footprint.

Why The Government Is Tightening Controls Now

Officials say the move is aimed at protecting profitability and capital buffers at PSBs and insurers as they navigate global volatility, higher funding costs and potential stress pockets. It also fits the finance ministry’s narrative that banks must focus on core business, cut wasteful spends, and show discipline before seeking any future capital support from the exchequer.

Financial Austerity Signals

DFS tells PSBs, RRBs and PSU insurers to impose strict cuts on non-essential spending
Internal reviews and meetings to default to video conferencing rather than physical gatherings
Foreign travel for senior management to be capped and replaced with virtual participation where feasible
Institutions encouraged to replace hired petrol and diesel vehicles with electric cars over time
Measures align with the government’s push for austerity, core-focus banking and greener operations